Monday, October 31, 2016

If there is any lesson to be learned from the ghosts of Watergate, it is that the big-money support of a leader who has lost the ability to deliver the goods crumbles very quickly as the endgame unfolds.

The parallels between Hillary Clinton and Richard Nixon are not legal--they are political: specifically, how can a leader crippled by scandal and cover-ups govern?

In even blunter terms: how can a crippled politico deliver the goods to the special interests who bet their cash and political capital on the politico's ability to deliver favors?

Among the many ghosts of Watergate, one specter especially haunts Hillary:once the special interests and party stalwarts who defended you through every scandal and every cover-up--month after month and year after year, on the promise that you would deliver the goods upon ascending to the presidency--realize you are too damaged to deliver anything of value to anyone, why would they continue supporting you?

Once a politico has to declare "I am not a crook" based on legalese rather than a moral foundation, that politico's ability to lead has vanished. Hillary and her supporters rely entirely on legalese parsing of wrong-doing rather than on a self-explanatory, basic moral foundation of right and wrong.

Declaring "I am not a crook" because the wrongdoing escapes prosecution is the same as declaring "I am above the law." If the foundation of one's ability to lead is a reliance on legal parsing and allies in the Department of Justice squashing investigations while handing out immunity like candy on Halloween, the political capital required to lead no longer exists.

Ultimately, the President leads by moral suasion. Even the political act of delivering the goods to the special interests that funded your campaign and your wealth must be backed by the moral authority of personal integrity and a morally grounded appeal to the common good.

A politician who has effectively zero personal integrity is only as viable as his/her ability to deliver favors to the few (i.e. special interests) over the objections of the many. A reliance on cold-blooded horse-trading only works if the leader has enough political capital to arm-twist everyone into granting favors to allies and special interests.

But this political capital rests on moral suasion and support earned not by issuing promises but by leading the nation through thorny thickets to solutions that work for the many, not just the few.

Once the ability to lead has been lost, special interests can forget about getting favors. And once they realize their politico is a liability rather than an asset, self-preservation requires abandoning the liability as quickly as possible.

It's nothing personal, it's just business. Anyone who thinks Hillary has the personal integrity to build sufficient political capital to lead is delusional. Anyone who believes Hillary has the moral foundation to deliver the goods to the myriad special interests that have funded her campaign and her personal wealth is equally delusional.

Are Goldman Sachs et al. delusional? If there is any lesson to be learned from the ghosts of Watergate, it is that the big-money support of a leader who has lost the ability to deliver the goods crumbles very quickly as the endgame unfolds.

Sunday, October 30, 2016

The Deep State's most prescient elements must derail Hillary's campaign to clear a path to Trump's executive team.

Back in August, I asked Could the Deep State Be Sabotaging Hillary? I think we now have a definitive answer: "These blast points on Hillary's campaign... too accurate for the Mainstream Media. Only the forces of the Imperial Deep State are so precise."

The Mainstream Media is presenting the FBI investigation as a "lose-lose" situation for embattled FBI Director Comey. If Comey remained quiet until after the election, he would be accused of colluding with the Clinton campaign and its allies in the Department of Justice (sic).

But in going public, he stands accused by Democrats of "intervening in an election," i.e. raising doubts about Hillary's judgement and veracity days before Americans go to the polls.

Another narrative has Comey's hand forced by the threat of disgusted FBI agents leaking information that would show the FBI caved into political pressure from the Democratic Party and Clinton campaign to keep relevant material out of the public eye until after the election.

I submit another much more powerful dynamic is in play: the upper ranks of the Deep State now view Hillary as an unacceptable liability. The word came down to Comey to act whether he wanted to or not, i.e. take one for the good of the nation/Deep State/Imperial Project.

As a refresher: the Deep State is the unelected government (also called the invisible or shadow government) that is not as monolithic as generally assumed.

The neo-conservative globalists who want Hillary to continue pushing their agenda are the more visible camp, but another less visible but highly motivated camp realizes Hillary and her neo-con agenda would severely damage the nation's security and its global influence. It is this camp that is arranging for Hillary to lose.

The consensus view seems to be that the Establishment and the Deep State see Trump as a loose cannon who might upset the neo-con apple cart by refusing to toe the neo-con line.

This view overlooks the reality that significant segments of the Deep State view the neo-con strategy as an irredeemable failure. To these elements of the Deep State, Hillary is a threat precisely because she embraces the failed neo-con strategy and those who cling to it. From this point of view, Hillary as president would be an unmitigated disaster for the Deep State and the nation/Imperial Project it governs.

Whatever else emerges from the emails being leaked or officially released, one conclusion is inescapable: Hillary's judgement is hopelessly flawed. Combine her lack of judgement with her 24 years of accumulated baggage and her potential to push the neo-con agenda to the point of global disaster, and you get a potent need for the Deep State's most prescient elements to derail her campaign and clear a path to Trump's executive team.

Once this path is clear, the management of Trump's executive team can begin in earnest, a management process aimed at disengaging the nation and its global Empire from neo-con overreach.

If you think this scenario is "impossible," let's see how the election plays out before deciding what's "impossible" and what's inevitable.

Friday, October 28, 2016

Central banks seeking to boost inflation are waging financial war on the bottom 95% of households.

Central banks are obsessed with boosting inflation, but the "why inflation is good" arguments make no sense for households being ravaged by inflation. The basic argument is that inflation makes it easier for debtors to service their debts.

But this is only true if income rises along with costs. If income stays flat while costs rise, households lose ground--debt remains a burden as the purchasing power of income plummets.

Central banks and the mainstream media make two fatal errors when discussing inflation.

1. They assume an inflation rate that lumps all costs/prices into one number is meaningful. But the "headline" consumer price index (CPI) is meaningless for two reasons:

A. The "headline" CPI is easily manipulated by underweighting sectors with double-digit cost increases such as higher education, rent and healthcare, and by gaming hedonics and other adjustments.

B. Households and enterprises that are exposed to sectors with double-digit cost increases experience inflation at rates that are far higher than those households and enterprises that have little to no exposure to soaring rents, healthcare premiums and college tuition.

2. They lump all inflation-adjusted household income into one "headline number" of median household income. This is a meaningless number because it combines the top 5% of households that are experiencing strong income gains in the "recovery" with the 95% of households experiencing stagnant or declining purchasing power.

In other words, there is not one inflation rate or median household income, there are completely different classes of inflation and income. Americans in the top 5% with little exposure to the soaring big-ticket expenses of rent, healthcare and higher education are doing great, as their income/purchasing power is rising while their household budget is protected from 25% increases in rent, healthcare premiums, etc.

Households with stagnant incomes that are fully exposed to the ravages of soaring big-ticket expenses are experiencing catastrophic losses of purchasing power (i.e. inflation) on the order of 8% to 12% declines annually.

Take a look at these charts:

A better measure of how households are doing is to compare GDP (gross domestic product) and wages: if GDP is rising but household incomes aren't keeping pace with GDP, then households are doing worse--which is exactly what's happened in the "recovery":

The share of GDP devoted to wages is another basic measure of household well-being: the wage/salary share of the economy has been declining for 45 years:

Meanwhile, the top 5% is riding high: notice how the spending of the top 5% has pulled away from the stagnant spending of the bottom 95% during the "recovery":

Any household paying soaring healthcare premiums and co-pays is being crushed:

Ditto for households experiencing double-digit rent inreases:

Rising inflation crushes the purchasing power of the bottom 95% whose incomes are not rising along with double-digit cost increases in big-ticket expenses. Central banks seeking to boost inflation are waging financial war on the bottom 95% of households.

Wednesday, October 26, 2016

This "maximizing growth and profits is the highest good" mode of production is insane.

Correspondent Bart D. (Australia) captured the entire global economy in three words: The Landfill Economy. Stuff is manufactured, energy is consumed shipping it somewhere, consumers buy it and shortly thereafter it ends up as garbage in the landfill.

This is of course the definition of "economic growth": waste, inefficiency, environmental destruction--none of these matter. Only two things matter: maximize "growth" by any means necessary, and maximize profits by any means necessary.

The Landfill Economy now encompasses the entire planet. The swirling gyre of plastic trash the size of Texas between Hawaii and California: it's just one modest example of the planetary trash dump that "growth" and profit generate as byproducts/blowback.

The planet's oceans are one giant trash dump. Everything from plastic water bottles to abandoned fishing nets to radiation to containers that fell off ships is floating around even the most distant corners of the seas. Seabirds nesting in remote islands die of starvation as their guts fill with plastic bits of "permanent growth."

Globalization has turned the planet's land masses and rivers into trash dumps.Want to make a quick profit along a tropical sea coast? Dig some big holes near the coast, dump in baby prawns, food and chemicals to suppress algae blooms and diseases and then harvest the prawns to ship to the insatiable markets of the developed world.

Once the prawn farms are poisoned wastelands, move on and despoil another coastline elsewhere.

Globalization has greased the slippery slope from factory to landfill by enabling the global distribution of defective parts. Whether they are pirated, designed to fail or just the result of slipshod quality control, the flood of defective parts guarantee that the entire assembly they are installed in--stoves, vacuum cleaners, transmissions, electronics, you name it--will soon fail and be shipped directly to the landfill, as repairing stuff is far costlier than buying a new replacement.

The Keynesian Cargo Cults that rule global economics love The Landfill Economy because it means more "growth". Never mind the poisoned seas, rivers and land, or the immense waste of energy, commodities and labor that result from the global manufacture and distribution of shoddy products: if it adds to "growth," it's all good in the warped view of the Keynesian Cargo Cults.

We got your "growth" right here.

People are also tossed on the trash heap with careless abandon. The health of workers is a cost that reduces profits, so it's ignored unless it can be turned into a profit center via state funding for managing preventable diseases, i.e. sickcare.

A worker sickened by industrial waste or lifestyle illnesses who becomes a profit center is a wonderful source of "growth" and profits.

A worker who can't generate a corporation or state a profit is dumped on the trash heap as a matter of routine. A worker who can't generate somebody a profit or "growth" by taking on more debt to spend spend spend is worthless.

If a robot or software can do the same work, then it is self-destructive for an enterprise to pay a human worker: if profits fall, Wall Street will crucify the enterprise and competitors will eat it alive.

This "maximizing growth and profits is the highest good" mode of production is insane. It doesn't have to rule the world. As I outline in my book A Radically Beneficial World: Automation, Technology & Creating Jobs for All, other more efficient, sustainable and humane modes of production are within reach if we escape from the global grip of the destructive "growth by any means" cult.

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Tuesday, October 25, 2016

Much was lost when the Western Roman Empire collapsed, but islands of literacy, learning and security arose despite the constant conflicts and threats of invasion.

Once dissed as The Dark Ages, the Medieval Era is more properly viewed as a successful adaptation to the challenges of the post-Western Roman Empire era. The decline of the Western Roman Empire was the result of a constellation of challenges, including (but not limited to) massive new incursions of powerful Germanic tribes, a widening chasm between the Western and the Eastern Roman Empire (Byzantium), plague, an onerous tax burden on the non-elite classes, weak leadership, the dominance of a self-serving elite (sound familiar?) and last but not least, the expansion of an unproductive rabble in Rome that had to be bribed with increasingly costly Bread and Circuses.

In effect, The Grand Strategy of the Roman Empire ran out of time and money.The Grand Strategy, successful for hundreds of years, relied heavily on persuading "barbarian" tribes to join the Roman system for the commercial and security benefits. This process of integration worked because it was backed by the threat of destruction by military force.

The Empire maintained relatively modest military forces given its vast territory, but its road system and fleet enabled relatively rapid concentration of force to counter an invasion. It also maintained extensive fortifications along active borders.

All of this required substantial tax revenues, manpower and effective leadership, not just for fortifications, the army, roads and the fleet, but to maintain the commercial and political benefits offered to "barbarians" who chose integration in the Empire.

Once the military threats proliferated and the benefits of Imperial membership eroded, the Grand Strategy was unable to maintain the integrity of the Imperial borders.

As tax revenues and the bureaucracy they supported imploded, security declined, reducing trade and communications. This unvirtuous cycle fed on itself: reduced trade led to reduced tax revenues which led to phantom legions that were still listed on the bureaucratic ledgers but which no longer had any troops.

The collapse of the Western Empire was a process, not an event. Key organizational infrastructures that endured through the Medieval era--for example, the Roman Catholic and Orthodox Christian Churches--gained traction in the waning centuries of the Western Empire.

Monasteries offered islands of scholarship and literacy and in many cases offered security via fortifications.

As trade diminished along with secure trade routes, self-reliance became the order of the day outside the borders of the Byzantine and Persian empires.

Though political leadership shifted with the latest invasion from the steppes of Eurasia, the two branches of Christendom slowly converted many invading groups or consolidated existing Christian powers into alliances that bound together diverse groups and proto-states.

These alliances were typically contingent and temporary, as today's ally became tomorrow's enemy, or vice versa. Despite the shifting loyalties of constant invasion and warfare, the Byzantine Empire endured and Charlemagne (and others) in Western Europe established the fractured but still effective Holy Roman Empire.

Much was lost when the Western Roman Empire collapsed, but islands of literacy, learning and security arose despite the constant conflicts and threats of invasion. Venice offers one example of a small city securing trade routes with commercial centers that then funded a regional empire.

The tidiness of the old Empire could not be reinstated. The adaptations were as messy and untidy as the challenges that swept in from the steppes and forests.

So please don't diss the Dark Ages. Yes, the Roman baths, coliseums and political /social order fell into disrepair, but new ways of coping emerged that were as contingent and untidy as the era's multiple challenges.

New modes of production and new social /political orders do not arise fully formed. They are pieced together by trial and error and numerous cycles of adaptation, innovation and failure.

Monday, October 24, 2016

There are still opportunities to not just earn a wage, but the overhead, profit and capital skimmed by global corporations.

So how can someone earning $15 an hour as an employee get ahead? The short answer is: they can't. One worker earning $15/hour will struggle to get ahead, which I define as building capital that generates an income stream.

A family with four adults working full-time at $15 an hour with benefits can get ahead; together, they're earning $60/hour plus another $40/hour in benefits. Assuming they live under one roof and live frugally, their combined earnings of $100/hour will enable investing in income-producing capital.

There is another path to getting ahead: self-employment. Working for yourself isn't for everyone, but it does provide two avenues of wealth-building that are not available to employees: overhead and capital accumulation.

Consider a typical Corporate employee, and what the company charges customers for their time. The corporation charges the customer $100 an hour for the employee and pays the employee $20 an hour. The other $80 an hour goes to the corporation for labor overhead (Social Security, healthcare, pension /401K contribution, workers compensation insurance, etc.), general overhead (office, vehicles, accounting, Internet, phones, etc.) and profit.

Now consider the self-employed person who charges $70 an hour for the same work. The customer not only gets a 30% discount, they get someone who is motivated to do the job well enough to earn a referral or renewal of the contract.

The self-employed worker has $50/hour for overhead and hopefully some profit. The corporate employee earning $20/hour has to pay for his/her own vehicle, Internet service, etc. out of his/her wage.

The self-employed person pays the business-related expenses for vehicles, tools, Internet and phone service, accounting, home office, healthcare and other overhead expenses with pre-tax income--the $50 an hour he/she earns above and beyond the $20/hour wage.

The self-employed worker is also constantly investing in the capital of his/her enterprise. Capital comes in many forms: new tools, skills, contacts, collaborators/ subcontractors-- all the many variations of intellectual, social and human capital that create value.

In the corporate/employee setting, the corporation captures much or most of the employees' capital accumulation. The self-employed worker captures 100% of all capital accumulated.

Over a decade, this accumulated capital generates wealth that is unavailable to employees of corporations or the state. If we compare wealthy people with everyone else, what we notice is the wealthy own businesses and have very little debt, while everyone else owns very little productive capital while being burdened with plenty of debt.

Is it easy to be self-employed / start a new enterprise? No, it isn't. If anything, it's become more difficult in an era of corporate/ cartel dominance and regulatory capture:

But there are still opportunities to not just earn a wage, but the overhead, profit and capital skimmed by global corporations. Entrepreneurial success ultimately flows not from just from specific skills but from the eight essential skills that anyone can develop--skills I describe in Get a Job, Build a Real Career and Defy a Bewildering Economy.

Let's face it--lots of stuff no longer works very well. As costs rise, globalization supplies defective, pirated parts, and fewer people care due to burn-out, more and more of everyday life falls into the category of "no longer works very well." Every one of those things that no longer works well offers an opportunity for a self-motivated person to fix someone else's problem-- and not just for a wage, but for the overhead, profit and accumulated capital that is currently skimmed by global corporations.

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